Substrate emerges from stealth with $100M to build America's first next-gen semiconductor foundry by 2028

you about linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product road maps. Our next guest is James Proud from Substrate. Welcome to the show. James, how are you doing? Suited up. Love it.

Thank you for having me, guys. It's an honor. You look fantastic. uh please introduce uh yourself, give us a little bit of the backstory, and then uh tell us the general o overview of the company, what you're building, and where it's positioned in the in the supply chain of the semiconductor uh industry. Sure.

I I I think quite simply what we're what we're doing is a bet that America can do hard things again. Yeah. And that uh if it's important enough, then we can go and do it. It's not a question of whether we can or not.

And I think when it comes to advanced chips, I think we all know and we all believe this is certainly important enough. And so our our our bet is that the United States invented this technology. We can invent the next generation again.

And and starting with the core process of lithography is how you can actually go and make a what we think a next generation foundry. Yep. Okay. So I I think many viewers will be familiar with the general semiconductor stack. You have the design shops like Nvidia. You have your TSMC, the FAB.

You have ASML, the the lithography machinery maker. You might have Trump or uh Zeiss or some other supplier deeper in the chain. Um how do you see yourself fitting in? Are you vertically integrated? Do you want to come in and at the ASML level, at the TSMC level?

Uh we've talked to other teal fellows like the folks at Etched where they're not setting up a fab but they are designing a new chip and they're going to work with at TSMC to run that process. How do you see yourself fitting into the stack?

Yeah, we're we're we're slightly insane and we think that the the United States can build and sustain a new pure play foundry business. Um and to do that we need to be a little bit more vertically integrated than usual. Usually you have the tooling makers, you have the fabs that buy the tools.

We see ours is more a sort of return to uh the beginning of the industry where everyone sort of did a little bit of everything. And so for us, we're we're going to start making our own tools specifically around the lithography piece. Yep. That makes a ton of sense.

Uh you've been on a on a press blitz this week uh all all over the map. What was what was the last year like leading up until this point? What have been what have you been focused on? And then what does the next year look like specifically in terms of making progress against all these goals?

Um, honestly, incredibly, incredibly hard. I I there's a there's a there's a video that I'm sure you guys have seen of when Elon was being interviewed about the Model 3 ramp and he he sort of looks at the like looks at the floor and talks about how his head and heart physically hurt from how hard he had to work.

And um I know exactly what that feels like and I'm sure a lot of our team do as well. But as I said, it goes back to like is this important enough to actually make it happen?

And and and we believe that that this certainly is and we're very proud of the results that we have and and wanted to show the world and sort of tell people what we believe and and um what we're doing.

And then what what is uh you know more tactically like what are you know this is uh the kind of company that uh that it's uh the the true potential will only be able to achieved be achieved across decades right this is not the kind of company you start uh and expect to um uh you know it's it's it's a it's it's a massive journey but like how do you break it up with the team like what what are you looking to accomplish more uh specifically in the next like one to two years.

Well, moving quickly, I think, is is is sort of one of the the key important parts of this. I think that this 10 years from now is far less important for the United States 2, three, four from now. And so, our goal is in 2028 to actually have a facility constructed and be running wafers.

And so, um, one of the reasons why we're coming out publicly is it's going to be very hard to start building big particle accelerators, big clean rooms in in secret. And so, the the the goal is we we start doing that very quickly and sprint to 28. Walk through some of the milestones to date.

Uh, do you have to come up with new ways to etch chips essentially because of IP and you or do you need to do a bunch of licensing deals? Is it is a big piece of the equation for the last year been marshalling capital and then placing orders to buy equipment and build up a facility?

There's so many different ways that the business could take shape if the general goal is like let's build a fab in America. I can imagine a bunch of different ways to solve that. But how did you go about solving it? Yeah.

So, so up to now the company is is really three years old and and the the big thrust so far has been building lithography tools, demonstrating that they work, printing the the smallest things that that human humans are able to go and print. And um that's been the focus really up to now.

And in terms of like what kind of tool, the IP and and and the like, our focus has been how do you reduce cost and complexity. And so all of the design choices we've made have been driven by that. And and really like EUV and and the tools that that exist today, these are modern miracles. These things are incredible.

The engineering incredible. But but but the choices were made in the in the the really the '9s and and took a while to scale up. Our approach has been on the lithography side. If you were building a next generation lithography tool today, would you make the same technical choices?

We've believed no and and the answer is no. What's it been like on the recruiting side? Have you been visiting the Netherlands, visiting Taiwan? How are you thinking about building uh building building uh the the team going forward? Yeah. Yeah.

as as I I sort of said at the start like this has been primarily it sounds very simplistic but a bet on the United States I bet that we still have the best engineers the best scientists the best national labs like if you look at the history of semiconductors this was all invented by the United States transistors finfet like American companies usually maybe it's basically been IBM and Intel that invented all of that stuff and so like the the bet is that we have the people, we have the talent, it's just can we actually have a new direction and and so that's been um the the work that we've done and so predominantly we've been recruiting from American companies, US national labs.

So all here yeah that's why America can do things like the chips act and can restrict uh the way ASML equipment moves to China because uh America because these the IP was developed here in America. So even if it's changed hands, we still have uh some leverage. Uh fascinating. Uh take us through the fund raise.

Uh how did it come together? Who's involved? What's the story with the latest fund raise? It feels like a big ambitious project that needs some very ambitious capital, but uh what happened? So So I want to actually quickly go back to your your previous point about export restrictions.

I a big belief that we've had is that we we shouldn't bet that China won't do this and and and and a big part of what we're doing is that like there's there's there's there there's the United States and there's China and those are really the two countries that can actually attempt something like this and because of export restrictions we know they're trying and and and our belief is that if we're not trying to build what a next generation foundry looks like today we might wind up 5 10 years down the line in a in a really difficult place.

And so that's been a big sort of motivation because of the the timelines. These take these things take a while to play out on on the funding. Um I I know there's a there's a 100 plus number that's out like that's a more actually historical, but clearly we're not going to build a a fab with that amount of money.

Um the the key thing though is that unlike I think sort of traditional semiconductor fabs because we focused on vertically integrating tools, we can reduce that cost and complexity. So you don't need to spend 10 plus billion dollars to even get something up and running.

We think we can actually get that done for for a much much lower cost. Um, and then on on on the the the previous money that was announced, I think a huge shout out needs to go to our investors because because really when when I started this company, I said there's a 1% chance of success and they still invested.

And so, um, for for the Founders Fund, the General Catalysts of the world and and all of the others, um, these guys deserve [clears throat] a huge amount of, um, credit. Like that's true venture capital. And um we think hopefully with these results um we're showing that yeah these these crazy bets can work.

Uh is there any world where you partner with uh strategic investors or someone else in the stack? Is there a is there a natural bed fellow in the ecosystem that doesn't feel m like feels like there might be some synergy here long term?

I mean 100% like uh for for the entire American economy it's now basically built on top of AI which is built on top of advanced semiconductors and so um there's like we see this as a sort of a a whole of nation effort and so the the more people we can partner with we're we're very open to that. Very exciting.

Well, thank you so much for coming on the show. Congratulations coming out of Stealth massive week and uh I'm sure you'll be back on very soon. We'll talk to you soon. And thank you the production team. thanks you for potentially the most uh perfect uh Zoom interview. It looks fantastic.

So uh shout out to shout out to your team. I like the im as well. That that's a nice touch. Have a great rest of your day. Great stuff. We'll talk. Thank you guys. [clears throat] Bye. See you. Up next we got Sean Maguire from Seoia Capital coming. Oh, what's he wearing? What's he wearing on the hat? There he is.

I got so excited about the hat. I forgot to do the ad read. numeralhq. com sales